Basmati rice price dips by 12 percent as area under cultivation rises and no fresh export orders from Iran

Mumbai: In some relief for consumers, basmati rice has become cheaper 12 percent during the past one month due to an expansion in the area under cultivation and suspension of fresh exports to US sanction-hit Iran, the largest buyer of India’s aromatic rice.

The fair average quality (FAQ) variety is currently quoting at Rs 72 a kg in the benchmark physical Delhi wholesale market, as compared to Rs 82 about a month ago.

The ongoing payment stoppage by Iranian importers may cut India’s basmati exports to that country, which is facing economic sanctions from the United States.

Indian exporters executing old orders

“Indian exporters are currently executing old orders. Hence, there is no export problem as of now. But, importers in Iran have stopped fresh payments for the past one month, bringing new orders to a complete halt. As long as advance payments to their accounts continue, exporters would face no issues. But, fresh exports would be hard. Indian markets have already started responding to Iran’s payment stoppage, and basmati prices shed Rs 10 a kg or 12 percent the past one month,” said Sushil Jain, vice president, All India Rice Exporters’ Association (AIREA).

Informed sources said advance amounts of Rs 1,800 crore received from Iranian importers are lying in various banks accounts held by the Iranians in India. India’s basmati rice exporters would continue till payments from these accounts are consumed.

Future price movement would depend upon progress of monsoon and farmers’ interest in sowing

“Basmati prices have dipped in the last one month. But, future price movement would depend upon the progress of this year’s monsoon rain and farmers’ interest in sowing of basmati paddy,” said Anand Goyal, owner, Akash Rice Mills, a Delhi-based basmati rice miller, trader and exporter.